We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is MSCI (MSCI) Down 7.1% Since Last Earnings Report?
Read MoreHide Full Article
It has been about a month since the last earnings report for MSCI (MSCI - Free Report) . Shares have lost about 7.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is MSCI due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
MSCI Q4 Earnings Beat Estimates, Recurring Subscriptions Up
MSCI’s fourth-quarter 2022 adjusted earnings of $2.84 per share beat the Zacks Consensus Estimate by 4.80% and increased 13.1% from the year-ago quarter.
Operating revenues improved 4.8% year over year to $576.2 million and beat the consensus mark by 1.8%.
Recurring subscriptions accounted for 75.1% of revenues and increased 13.1% year over year to $432.5 million.
Asset-based fees accounted for 21.7% of revenues but declined 16.2% year over year to $125.2 million.
Non-recurring revenues accounted for 3.2% of revenues and also increased 3.2% year over year to $18.5 million.
At the end of the reported quarter, average assets under management were $1.222 trillion in ETFs linked to MSCI indexes. The total retention rate was 93% in the quarter under review.
Quarter Details
In the fourth quarter, Index operating revenues decreased 0.8% year over year to $329.3 million. The year-over-year decline was primarily due to lower asset-based fees, partially offset by higher recurring subscription revenues.
Growth in recurring subscription revenues was primarily driven by strong growth from market-cap weighted Index products and growth from factor, ESG and climate Index products.
Asset-based fees’ decline was primarily driven by a decrease in revenues from ETFs linked to MSCI equity indexes and non-ETF indexed funds linked to MSCI indexes, driven by a decrease in average AUM and average basis point fees.
Analytics operating revenues improved 8.4% year over year to $149.7 million, driven by higher recurring subscription revenues from both Multi-Asset Class and Equity Analytics products.
ESG and Climate segment’s operating revenues increased 31.2% from the year-ago quarter to $63.6 million, primarily driven by strong growth from recurring subscriptions related to Ratings and Climate products.
Other revenues, which primarily contain the Real Estate operating segment, were $33.7 million, up 6.9% year over year.
Adjusted EBITDA increased 6.4% year over year to $339 million in the reported quarter. Adjusted EBITDA margin expanded 260 basis points (bps) on a year-over-year basis to 53.6%.
Total operating expenses decreased 0.7% on a year-over-year basis to $267.5 million. Adjusted EBITDA expenses were $237.2 million, up 2.6%, primarily reflecting higher non-compensation costs related to information technology costs.
Operating income improved 10% from the year-ago quarter to $308.8 million. Moreover, the operating margin expanded 260 bps on a year-over-year basis to 53.6%.
Balance Sheet & Cash Flow
Total cash and cash equivalents, as of Dec 31, 2022, were $993.6 million compared with $867.1 million as of Sep 30, 2022.
Total debt was $4.5 billion as of Dec 31 compared with $4.51 billion as of Sep 30. The total debt-to-adjusted-EBITDA ratio (based on trailing 12-month-adjusted EBITDA) was 3.4 times, within the management’s target range of 3-3.5 times.
Free cash flow was $295 million, up 12.1% year over year.
MSCI bought shares worth $70.1 million during the reported quarter. Notably, $1.3 billion is outstanding under MSCI’s share-repurchase authorization as of Jan 30, 2023. The company paid out dividends worth $100.7 million in the fourth quarter.
Guidance
For 2023, MSCI expects total operating expenses in the range of $1.090-$1.130 million. Adjusted EBITDA expenses are expected between $965 million and $995 million.
Interest expenses are expected between $184 million and $187 million. Capex is expected to be $75-$85 million. Net cash provided by operating activities and free cash flow is expected to be $1.145-$1.195 billion and $1.060-$1.120 billion, respectively.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, MSCI has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, MSCI has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is MSCI (MSCI) Down 7.1% Since Last Earnings Report?
It has been about a month since the last earnings report for MSCI (MSCI - Free Report) . Shares have lost about 7.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is MSCI due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
MSCI Q4 Earnings Beat Estimates, Recurring Subscriptions Up
MSCI’s fourth-quarter 2022 adjusted earnings of $2.84 per share beat the Zacks Consensus Estimate by 4.80% and increased 13.1% from the year-ago quarter.
Operating revenues improved 4.8% year over year to $576.2 million and beat the consensus mark by 1.8%.
Recurring subscriptions accounted for 75.1% of revenues and increased 13.1% year over year to $432.5 million.
Asset-based fees accounted for 21.7% of revenues but declined 16.2% year over year to $125.2 million.
Non-recurring revenues accounted for 3.2% of revenues and also increased 3.2% year over year to $18.5 million.
At the end of the reported quarter, average assets under management were $1.222 trillion in ETFs linked to MSCI indexes. The total retention rate was 93% in the quarter under review.
Quarter Details
In the fourth quarter, Index operating revenues decreased 0.8% year over year to $329.3 million. The year-over-year decline was primarily due to lower asset-based fees, partially offset by higher recurring subscription revenues.
Growth in recurring subscription revenues was primarily driven by strong growth from market-cap weighted Index products and growth from factor, ESG and climate Index products.
Asset-based fees’ decline was primarily driven by a decrease in revenues from ETFs linked to MSCI equity indexes and non-ETF indexed funds linked to MSCI indexes, driven by a decrease in average AUM and average basis point fees.
Analytics operating revenues improved 8.4% year over year to $149.7 million, driven by higher recurring subscription revenues from both Multi-Asset Class and Equity Analytics products.
ESG and Climate segment’s operating revenues increased 31.2% from the year-ago quarter to $63.6 million, primarily driven by strong growth from recurring subscriptions related to Ratings and Climate products.
Other revenues, which primarily contain the Real Estate operating segment, were $33.7 million, up 6.9% year over year.
Adjusted EBITDA increased 6.4% year over year to $339 million in the reported quarter. Adjusted EBITDA margin expanded 260 basis points (bps) on a year-over-year basis to 53.6%.
Total operating expenses decreased 0.7% on a year-over-year basis to $267.5 million. Adjusted EBITDA expenses were $237.2 million, up 2.6%, primarily reflecting higher non-compensation costs related to information technology costs.
Operating income improved 10% from the year-ago quarter to $308.8 million. Moreover, the operating margin expanded 260 bps on a year-over-year basis to 53.6%.
Balance Sheet & Cash Flow
Total cash and cash equivalents, as of Dec 31, 2022, were $993.6 million compared with $867.1 million as of Sep 30, 2022.
Total debt was $4.5 billion as of Dec 31 compared with $4.51 billion as of Sep 30. The total debt-to-adjusted-EBITDA ratio (based on trailing 12-month-adjusted EBITDA) was 3.4 times, within the management’s target range of 3-3.5 times.
Free cash flow was $295 million, up 12.1% year over year.
MSCI bought shares worth $70.1 million during the reported quarter. Notably, $1.3 billion is outstanding under MSCI’s share-repurchase authorization as of Jan 30, 2023. The company paid out dividends worth $100.7 million in the fourth quarter.
Guidance
For 2023, MSCI expects total operating expenses in the range of $1.090-$1.130 million. Adjusted EBITDA expenses are expected between $965 million and $995 million.
Interest expenses are expected between $184 million and $187 million. Capex is expected to be $75-$85 million. Net cash provided by operating activities and free cash flow is expected to be $1.145-$1.195 billion and $1.060-$1.120 billion, respectively.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, MSCI has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, MSCI has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.